The Interview: Mark Cunnington and Tim Martin with John Adams

By csd.com.au

Security Electronics' editor John Adams speaks with Mark Cunnington, senior vice president of security, and Tim Martin, senior vice president APAC, about Anixter's acquisition of Inner Range and CSD.

JA: Do you think the Australian security industry is across the size of Anixter ($A7.5 billion in sales annually) and/or appreciates the historical focus Anixter has on networking and security?

TM: Anixter is a market leader in the data and network infrastructure market in Australia but is somewhat less known in the security industry. Prior to this acquisition, Anixter had a healthy security business here, but the presence was not as large as it is in other regions of the world. Anixter is the largest security distributor in the world, and this acquisition means Anixter and CSD together are now the largest security distributor in Australia by a substantial margin.

JA: Does having networking and security as one of its three core segments make Anixter a natural fit for Inner Range and CSD, which between them are entirely focused on developing and distributing cutting-edge networked and integrated security solutions?

TM: Anixter's vision is to provide customers with a full range of infrastructure and end devices for the next generation of intelligent buildings. Inner Range's Intelligent Management Software and integrated access and security systems, when coupled with CSD's extensive distribution portfolio of surveillance and security equipment, fit perfectly within Anixter's vision.

JA: Could you describe the structure the Inner Range and CSD business will now have - what will the business be called, will overall operations remain the same, with the same/similar local management team? Who will the team be?

MC: CSD and Inner Range still exist as independent businesses and will trade under their existing names, but the shareholding has changed. CSD is a trade counter-based business which works on a range of projects, from small four-camera systems to large hospitals and universities. It is a high-touch business with respect to branch and technical support and we pride ourselves on our ability to service everyone, from sole traders to multinationals.

Anixter's existing business is more project-focused and excels in this segment of the market. Anixter purchased CSD precisely because it was a trade-counter-based, high-touch distributor, so the intention is to grow and develop this business model, not radically reinvent it. Other than the recent retirement of Vin Lopes, there have not been any management team changes at either Inner Range or CSD, and everyone is extremely excited by the opportunities presented by this acquisition. Meanwhile, Inner Range will operate as a distinct entity to the security segment of Anixter, with separate management and structure. In some respects, Inner Range will be a supplier to the Anixter distribution business.

JA: When it comes to CSD management, will Anixter be influencing the business at the macro level, or will the local management team be tasked with continuing to steer the business in the way they have done?

MC: The existing, extremely competent, CSD management team will run with a lot of local autonomy but will now be able to leverage Anixter's global experience and capabilities. Anixter's local management in the Asia Pacific are a very experienced, capable team and we are already sharing ideas and working through ways to improve our product range and service offering to customers. Anixter also has a range of capabilities in logistics, global account management and supply chain services that will improve CSD's offering to its customers.

JA: In which markets will Anixter be distributing Inner Range solutions?

MC: Inner Range will operate as quite a distinct entity to the security distribution segment of Anixter. Anixter has long-standing relationships with manufacturers around the world and the Inner Range acquisition is not designed to change those mutually beneficial relationships. There will be some global markets in which Anixter has gaps in their portfolio that Inner Range products can fill. However, market expansion of Inner Range products will be a very careful, methodical process.

JA: Inner Range is an engineering engine with an integral R&D platform. Will that commitment to R&D remain part of the business?

MC: Anixter will continue to invest in Inner Range technology. The business is still growing at a rapid rate in Australia and continued investment is one of the main drivers of this growth. The commitment to R&D will grow and there will be tailored developments for other markets. Inner Range already has a presence in the UK and Europe and we currently have R&D projects underway to optimise our products for these markets. Over the next 12 months we have major releases slated for our core platforms, Integriti, Inception and Multipath.

TM: Many Australian customers would not appreciate Anixter’s technical capabilities and history. The ubiquitous Cat 5 cable that runs throughout every building in the world is part of the ANSI cable category system, which came out of Anixter's own propriety Levels System in 1989. Essentially, Anixter invented the cable category system that defines structured cabling around the world. In addition, Anixter has staff on many influential standards committees, such as ONVIF, which defines the world's CCTV standards. Anixter's investment in Inner Range R&D is really a continuation of its history of deep technical capabilities and innovation.

JA: One of the strengths of the CSD and Inner Range business model was that it allowed input to flow directly from customers, to distributor, to engineers, giving granular sensitivity to needs of the market and to the market’s reactions to the performance of its technology. Will this free flow of information continue?

MC: Inner Range always had great market feedback from a trusted group of installers. This is an area that I believe we will expand in the next 12 months. We are currently planning some initiatives that will broaden the group of installers and end users that give us market feedback.

JA: Another strength of Inner Range and CSD has been the ability of the engineering team to undertake customised applications in real time, working hand in hand with integrators and customers. It’s hard to express the power of this when compared to the alternative business model, in which multiple access control 'manufacturers' have for decades supplied a relatively fixed range of Mercury control panels and I/O boards. Will we see Inner Range engineers engaged with the market in this same customised way and might this capability expand to other markets into which Anixter will carry Inner Range products?

MC: Inner Range leads the industry with its ability to develop third-party integrations. The combination of a technology platform that was designed from the ground up as an open platform for integration and an experienced R&D team has allowed Inner Range to offer customized, cost-efficient solutions to installers and end users. Anixter appreciates that this capability is one of the keys to the success of Inner Range, and this type of development and market responsiveness will continue.

JA: If Anixter will be distributing Inner Range products in certain markets, will there be any cross-over of product distribution when it comes to CSD? For instance, might CSD carry a greater weight of cable and/or networking solutions in the future?

TM: This is one of the obvious areas of synergy that the acquisitions bring. Anixter has access to thousands of brands across the globe and we will be introducing new solutions in security, data and networking over the coming months. The acquisition has already given CSD customers direct access to cameras, networking equipment and a full range of servers and storage devices. This is a huge opportunity and we will ensure we train our staff and technical resources before bringing in new products.

JA: Inner Range and CSD were icons of the Australian electronic security industry and founders of the businesses, including Doug Fraser, Vin Lopes and yourself, must have strong feelings about this acquisition - it's the end of an era, as well as the beginning of something new. How are Vin and Doug feeling and how are you feeling yourself?

MC: Doug Fraser left the business four years ago and is retired and enjoying life. We had put a succession plan in place prior to this acquisition to prepare for Vin easing out of his involvement with Inner Range. Over the last 18 months, Peter Krincevski has been CEO of Inner Range and actively managing the business. Vin has mixed feelings about his departure, he understands Anixter is a great home for the companies but still has a lot of energy and passion and is embarking on a range of charitable ventures.

Personally, I am 100 per cent sure this acquisition is the best thing for our customers and staff. Anixter has a very agile culture for a global company and I am really enjoying working with the new team and learning an enormous amount from exposure to Anixter’s systems and culture. The acquisition also gives our staff a range of new career opportunities. Helping to facilitate these opportunities is extremely gratifying.

JA: What about the combined feelings of the team - so many Inner Range and CSD people put their hearts into the business for so long - what's the message to them from management?

MC: CSD and Inner Range staff give 150 per cent of themselves to the company. Acquisitions are always challenging for employees, but in this case, it is really the coming together of two high-performing complementary businesses rather than an acquisition. This coming together assures the future of these two organisations and provides a range of career opportunities for staff that private ownership could never offer.

JA: What would you like to say to customers, end users and integrators, about the future of the company and its solutions?

MC: With the backing of a Fortune 500 company, the future of both companies is extremely exciting. To CSD customers, we can assure them they will see investment in our branch network, service levels and an exciting range of new products that will become available within the next few months. For Inner Range installers and end users, there will be a continued emphasis on innovation and R&D for the Australian market.

The previous owners of CSD and Inner Range had approaches from potential acquirers through the years and we were extremely careful when considering acquisition offers to ensure we would find a caring home where the businesses would be nurtured and grown. With Anixter, I firmly believe we have found the right partner and our staff and customers can be assured of a very positive future.